ExpressJet improves balance sheet; Hawaiian Airlines' net profit declines

North and South American airline stocks declined for another day on Wednesday (28-Jul-2010) as the Dow (-0.4%) retreated on news manufactured durable foods sales declined by USD2 billion in Jun-2010 compared with May-2010. The AMEX Airline Index fell 0.6% as a result.

ExpressJet improves balance sheet

ExpressJet (-4.0%) registered the day’s biggest fall, despite stating the day prior it successfully executed steps to improve its balance sheet, including settlement related to the remaining balance of its auction rate securities portfolio and the first redemption of its 11.25% Convertible Secured Notes due 2023. This settlement relates to ExpressJet's final auction rate securities balance of approximately USD1.1 million par value, which will be sold for 90% of par value.  Since Oct-2008, ExpressJet settled or sold its entire USD65 million (par value) auction rate securities portfolio for approximately 88% of par value, realising approximately USD57 million in cash.  

ExpressJet used proceeds from auction rate transactions to repay its outstanding USD5 million Citibank credit facility. The company is also scheduled to complete the redemption of additional USD5.0 million in principal of its 11.25% Convertible Secured Notes due 2023 on 02-Aug-2010

Hawaiian Airlines' net profit declines

Hawaiian Airlines (-2.7%) also fell. The day prior, the carrier reported its ninth consecutive quarterly profit for the three months ended 30-Jun-2010 at USD9.0 million. However, this was a decline of 67.3% year-on-year. Operating profit was also down, declining 24.3% to USD24.0 million, despite a 8.2% improvement in revenue to USD315.9 million. Costs for the quarter rose 12.1% to USD291.9 million.

Hawaiian President and CEO, Mark Dunkerley, defended the decline in profits, telling the Honolulu Star-Advertiser, that the lower earnings need to be considered in context, with the quarter comparing with “a record year in 2009”. He noted the majority of US carriers are now comparing their profitability for this quarter with a year of record losses in 2009.

Alaska Air gains

Elsewhere, Alaska Air (+1.0%) gained. Earlier this week, analysts at Dahlman Rose & Co stated they are positive on the carrier’s stock, along with Delta Air Lines (-1.5%) and US Airways (+0.8%). The analysts cited Delta and Alaska Air’s use of free cash flow to pay down debt, adding that for the first time in three year, US Airways is no longer looking to raise capital.

COPA (+0.9%) and FedEx (+0.6%) stocks also rose for the day.

North & South America selected airlines daily share price movements (% change): 28-Jul-2010